On August 7, Judge Richard Leon of the U.S. District Court for the District of Columbia delayed ruling on ex-Amaranth trader Brian Hunter's suit to enjoin the Federal Energy Regulatory Commission (FERC) from continuing its show-cause investigation into Hunter's and hedge fund Amaranth Advisors' 2006 gas futures trading activities.Judge Leon promised a ruling as fast as possible, but not “in the next few days.”

Hunter filed his suit on July 23 alleging that FERC lacked jurisdiction to bring an enforcement action against him because the alleged actions pertain to futures rather than physical natural gas.Hunter argued that only the Commodity Futures Trading Commission (CFTC) possesses authority to take enforcement actions in connection with commodity futures.Hunter claimed that the FERC action harms his new commodities trading fund, Solengo Capital Advisors, in that traders are deterred from taking employment with the fund and Solengo is being denied registration as an investment advisor due to Hunter's ownership of it.How either allegation bears on FERC's jurisdiction is not explained.

The case against Hunter is the first in which FERC has claimed jurisdiction over commodity futures trading.FERC brought its show cause order for $291 MM in fines against Amaranth and its former heads under the FERC's anti-manipulation rule from 2005's Energy Policy Act.The CFTC and FERC are working in tandem to investigate the hedge fund's collapse late last year. FERC Chair Joe Kelliher explained that the outcome of the two investigations may be different as the CFTC operates under a tougher intent standard and under different statutory guidance.

Both the CFTC and FERC allege Hunter and Amaranth attempted to manipulate natural gas futures prices by, in one example, acquiring more than 3,000 New York Mercantile Exchange (NYMEX) contracts in advance of the closing price range timeframe and then selling those contracts during the closing session which consequently impacted the settlement prices of swaps traded on the IntercontinentalExchange (ICE).These actions allegedly lowered prices on the NYMEX, which in turn benefited Amaranth's derivative positions on the ICE and other exchanges.

Amaranth and its former leaders are not the only ones to come under recent scrutiny regarding trading practices.FERC issued a show-cause letter on July 26 to Energy Transfer Partners that asked for $167 MM in penalties, including $97.5 MM for what is being called the alleged Houston Ship Channel manipulation and Oasis bias/collusion and $69.2 MM in disgorgement of profits.In addition, FERC is seeking a one-year revocation of Energy Transfer Partner's blanket certificate to sell natural gas.

Concurrent with these regulatory enforcement actions, the US Congress has been demanding better oversight and transparency of energy exchanges, and the CFTC is under pressure for both rulemaking and enforcement actions since Amaranth's collapse. It will convene a hearing on September 18 to investigate trading on regulated futures markets like NYMEX and on exempt commercial markets like ICE.The hearing is intended to form the basis of recommendations from the agency to Congress.